Assume a Simplified Banking System Subject to a 20 Percent

question 101

Multiple Choice

Assume a simplified banking system subject to a 20 percent required reserve ratio. If there is an initial increase in excess reserves of $100,000, the money supply:

• A) increases $100,000.
• B) increases $500,000.
• C) increases $600,000.
• D) decreases $500,000.

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Definitions:

Second-degree Felony

A category of offense that is less severe than a first-degree felony but more severe than a third-degree felony, often involving significant harm or risk but with factors that mitigate the offender's culpability.

Imprisonment

The act of confining someone in a prison as a punishment for crimes they have been convicted of.

Punishable

Describing an action or offense that can be penalized by law, typically through fines, imprisonment, or other legal sanctions.

Serious Crime

A criminal offense that is considered more severe and is usually punishable by significant penalties, including long-term imprisonment.